Today's Dead Cat Bounce Stock Is Sarepta Therapeutics (SRPT)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sarepta Therapeutics ( SRPT) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sarepta Therapeutics as such a stock due to the following factors:

  • SRPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.4 million.
  • SRPT has traded 264,309 shares today.
  • SRPT is up 3.5% today.
  • SRPT was down 8.8% yesterday.

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More details on SRPT:

Sarepta Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery and development of RNA-based therapeutics for the treatment of rare and infectious diseases. Currently there are 8 analysts that rate Sarepta Therapeutics a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Sarepta Therapeutics has been 1.5 million shares per day over the past 30 days. Sarepta has a market cap of $888.0 million and is part of the health care sector and drugs industry. The stock has a beta of 1.17 and a short float of 29.4% with 6.98 days to cover. Shares are down 2.3% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sarepta Therapeutics as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$28.27 million or 88.52% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • SRPT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 42.30%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 32.8% when compared to the same quarter one year prior, rising from -$42.08 million to -$28.27 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, SAREPTA THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 36.5%. Since the same quarter one year prior, revenues rose by 36.1%. Growth in the company's revenue appears to have helped boost the earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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